Last updated: January 18, 2012 11:57 pm

Silicon Valley learns fast in game of lobbying

During the ascent of the internet, Silicon Valley geeks tapped away at keyboards in northern California while Washington policy wonks debated welfare and taxes. Both groups happily ignored each other.

The isolation served the Valley well at first as it spawned many tech powerhouses without government interference. But its absence from the political arena had consequences and, in the battle over proposed anti-piracy legislation, the techies are playing catch-up to their politically entrenched opponents in the entertainment industry.

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“It is the first time the tech community as a whole, including all the tech folks beyond Silicon Valley, have really come to realise how things work in DC,” said Alexis Ohanian, cofounder of web-linking site Reddit. “We spend our money innovating, not lobbying.”

Media and entertainment companies are outspending tech companies at a ratio of four to one in the lobbying contest over the Stop Online Piracy Act – the 32 politicians backing the bill have received almost $2m in campaign contributions from the film, music and TV industries, compared with little more than $500,000 that ­politicians opposing the proposals have received from the computer and internet industries, according to MapLight, a campaign finance research company.

Overall, financial contributions to politicians who support the bill outnumber contributions to politicians opposed to it by 13 to one, with $92.2m spent in favour, compared with $7.2m opposed, between January 1 2009 and June 30 2011, the latest data show.

With that backing, the entertainment industry was bale to influence lawmakers to sponsor both Sopa and its sister bill, the Protect Intellectual Property Act, which would hold internet companies responsible for illegal downloads of films and music hosted on their sites.

Both proposals had been discussed for months and were practically written by the time Silicon Valley caught wind of them. This put tech groups in a reactive position. Yet, despite their financial disadvantage, they appear to be winning the battle for public opinion, using their websites and communication platforms to launch campaigns, urging consumers to lobby their representatives over the proposals.

“Old school lobbying and financial contributions can be made less powerful the better organised the public can be,” said Jimmy Wales, founder of Wikipedia, which blacked out its website in protest of the legislation.

Sites black out in protest

Wikipedia blackout

Internet companies, including Wikipedia and Craigslist, made good on their threats to black out their sites for the day in protest at proposed antipiracy legislation in the US Congress. Other popular sites, including Google, Wired and iCanHasCheezburger carried messages protesting against the bills, which technology companies say would stifle innovation and expose them to unfair liabilities.

Mark Zuckerberg, Facebook chief executive, made his most explicit comments to date on the bills. “We can’t let poorly thought out laws get in the way of the internet’s development,” he said. Protesters in New York and San Francisco took the streets with similar messages.

The demonstrations secured at least a partial win in Washington. Senator Marco Rubio of Florida, who had co-sponsored the Senate version of the legislation, said he would no longer support the bill. Another senator, John Cornyn of Texas, also said he was withdrawing his support for the bill.

Craigslist joined the blackout yesterday, while others, including Google and Wired ran messages opposing the bills. “We can’t let poorly thought out laws get in the way of the internet’s development,” Mark Zuckerberg, Facebook chief executive, said.

The White House has expressed scepticism over the bills, one of which is up for discussion next week. In the face of the protests, some politicians have been backpedalling for fear of alienating voters. Among them was Marco Rubio a senator from Florida, who had co-sponsored the Senate version of the legislation. He said he would no longer support the bill and others are expected to try to delay a vote until after the November election.

Nevertheless, tech groups have a lot of history to make up before they are on even ground with the media companies.

Silicon Valley’s relationship with Washington got off to a bad start in the late 1990s, when probes from the justice department and trade commission started rolling in. “First, legislators said ‘Oh wow, there’s a huge state out here that we haven’t been paying attention to,’ ” said Alan Webber, an analyst with the Altimeter Group. “Second, it was, ‘Oh wow, they have a lot of money. We can regulate them and get a lot of contributions from them.’ ”

Tech companies are paying into the coffers of US lawmakers and hiring lobbyists. Google opened an office in Washington six years ago, five years after its launch. It wanted to have a presence before it faced any problems, in contrast to Microsoft which was taken by surprise in 1998 by an antitrust investigation into the marketing of its Windows software. But Google was still naive. “They don’t realise that they could be considered harmful by someone else,” Mr Webber says. “Their perceptions are relative.”

Even so, Google quickly became a popular target for regulators on issues ranging from antitrust concerns over its advertising practices to privacy concerns over its mapping. The company now lobbies on these and many other issues.

Facebook, learning from Google, is getting an even earlier start. It opened a Washington office in 2007, three years after its launch, started two action committees and has been hiring DC insiders. “Facebook is much more politically astute,” Mr Webber said.

Additional reporting by David Gelles in New York

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